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Columbia Care Reports First Quarter 2019, Fourth Quarter and Full Year 2018 Financial Results

  • First quarter 2019 revenue increase of 45% over prior year
  • Completion of go-public transaction provides capital to fund
    long-term growth prospects
  • Expansion of US footprint with 13 lease signings in Florida,
    dispensary openings in Brooklyn, NY and San Diego, CA, reinforcing
    organic growth strategy in key markets

NEW YORK–(BUSINESS WIRE)–Columbia Care Inc. (NEO: CCHW) (“Columbia Care”, or the “Company”), one
of the largest multi-state operators in the medical cannabis industry,
with licenses in 15 jurisdictions in the US and the EU, today reported
financial results for its first quarter ended March 31, 2019 and fourth
quarter and full year ended December 31, 2018. All financial information
is provided in US dollars unless otherwise indicated.

First Quarter 2019 Financial Highlights

  • Revenue of $12.9 million, an increase of 45% from the prior year period
  • Gross profit, excluding changes in the fair value of biological assets
    and inventory sold, of $4.4 million, an increase of 29% over the prior
    year period
  • Net loss of ($25.1) million compared to ($9.7) million for the prior
    year period, reflecting the Company’s investment in its growth
    initiatives
  • Adjusted EBITDA of ($10.4) million compared to ($2.3) million for the
    prior year period, reflecting new market expansion, pre-opening
    facility expenses, organizational growth and expenses related to the
    Company’s go-public transaction1
  • Pro-forma cash as of March 31, 2019 of $169.6 million including
    proceeds from the closing of the Company’s go-public transaction on
    April 26, 2019 with zero debt

Subsequent to the end of the first quarter 2019, Columbia Care has
launched a new line of industrial hemp-based CBD products in conjunction
with the opening of its newest dispensaries in Brooklyn, NY and San
Diego, CA. Additionally, since the beginning of the year, Columbia Care
has entered into lease agreements for dispensaries in Delaware, the
District of Columbia and 13 new facilities in targeted markets in
Florida.

Our strong year over year growth in 2018 has continued into 2019 with
the launch of our state-of-the-art dispensary in Brooklyn as well as our
entry into two of the largest medical cannabis markets in the United
States, California and Florida,” said Nicholas Vita, Chief Executive
Officer of Columbia Care. “Access to the public capital markets will
allow us to accelerate growth as we expand operations in 12 of our 14
existing jurisdictions and enables us to expedite the commercialization
of our hemp-based CBD brands into traditional consumer retail channels.
By leveraging our extensive patient data and institutional experience,
we are committed to delivering products, services and brands designed to
meet the needs of consumers in markets where we believe we can have the
largest impact.”

Discussion of First Quarter 2019, Fourth Quarter 2018 and Full Year
2018 Results

Revenue for the first quarter of 2019 totaled $12.9 million, compared to
$8.8 million for the first quarter of 2018, representing an increase of
45%. Fourth quarter and full year 2018 revenue was $11.0 million and
$39.3 million respectively, compared to fourth quarter and full year
2017 revenue of $8.1 million and $29.2 million, representing increases
of 36% and 35%, respectively, over the prior year periods.

Revenue increased exclusively due to the Company’s organic growth in its
licensed jurisdictions coupled with higher consumer demand for Columbia
Care’s wide array of proprietary medical cannabis products, curated
third-party products and wholesale operations.

Excluding changes in the fair value of biological assets and inventory
sold, gross profit was $4.4 million in the first quarter of 2019, or an
increase of 29% over the prior year period. For the fourth quarter and
full year 2018, gross profit excluding changes in the fair value of
biological assets and inventory sold was $3.9 million and $16.5 million,
or an increase of 1% and 20%, respectively, over the prior year periods.

The Company’s gross profit for the first quarter of 2019 was ($2.2)
million, compared to $1.2 million or a decrease of $3.4 million from the
prior year period. Fourth quarter and full year 2018 gross profit was
($0.6) million and $17.1 million respectively, compared to fourth
quarter and full year gross profit of $20.0 million and $53.7 million
respectively. The overall decrease reflects increased gross profit
before fair value adjustments related to increased demand for the
Company’s product offerings, offset by adjustments for unharvested
biological assets.

Net loss for the first quarter of 2019 was ($25.1) million, compared to
($9.7) million, an increase of $15.4 million compared to the prior year
period, primarily due to higher operating expenses related to the
Company’s expansion in both new and existing markets. Net loss for the
fourth quarter and full year 2018 was ($20.4) million and ($39.7)
million, respectively, compared to net income of $2.8 million and $2.9
million for same periods in 2017, primarily due to fair value
adjustments as well as the Company’s on-going investment in its growth
initiatives.

Adjusted EBITDA for the first quarter of 2019 was ($10.4) million,
compared to ($2.3) million, a decrease of $8.1 million compared to the
prior year period. Adjusted EBITDA for the fourth quarter and full year
2018 was ($7.5) million and ($15.6) million, respectively, compared to
Adjusted EBITDA of ($1.5) million and ($4.7) million for same periods in
2017. Changes in Adjusted EBITDA were primarily driven by higher
operating expenses related to the Company’s expansion in both new and
existing markets. See “Non-IFRS Financial Measures”.

As of March 31, 2019, the Company had $59.1 million cash on hand. On a
pro forma basis, incorporating the closing of its go-public transaction,
the Company had $169.6 million cash on hand as of March 31, 2019 with no
debt.

Conference Call and Webcast Details

The Company will report complete financial results for the first quarter
2019 and fourth quarter and full year 2018 on Tuesday, May 14th,
2019 at 8:00 a.m. EDT. To access the live conference call via telephone,
please dial 1-877-407-8914 (US Callers) or 1-201-493-6795 (international
callers), no passcode is required. A live audio webcast of the call will
also be available in the Investor Relations section of the Company’s
website at https://ir.col-care.com/.

A replay of the audio webcast will be available in the Investor
Relations section of the Company’s website approximately 2 hours after
completion of the call and will be archived for 30 days.

Non-IFRS Financial Measures

In this press release, Columbia Care refers to certain non-IFRS
financial measures, such as gross profit excluding changes in fair value
of biological assets. These measures do not have any standardized
meaning prescribed by IFRS and may not be comparable to similar measures
presented by other companies. Columbia Care considers certain non-IFRS
measures to be meaningful indicators of the performance of its business.
A reconciliation of such non-IFRS financial measures to their nearest
comparable IFRS measure is included in this press release.

About Columbia Care Inc.

Columbia Care Inc. (“Columbia Care” or the “Company”) is one of the
largest and most experienced multi-state operators in the medical
cannabis industry, with licenses in 15 jurisdictions in the US and the
EU. With over 1,000,000 successful sales transactions since its
inception, Columbia Care is a patient-centered organization setting the
standard for compassion, professionalism, quality, caring and
innovation, working in collaboration with some of the most renowned and
innovative teaching hospitals and medical centers in the world. The
Company is committed to providing the type of education and transparency
patients deserve and quality of product that clinicians expect. In New
York, among the many products Columbia Care manufactures and sells,
EleCeed™, TheraCeed™ and ClaraCeed™ are the flagship pharmaceutical
product lines and are available in tablet, vaporization, tincture,
suppository and topical formulations. For more information on Columbia
Care, please visit www.col-care.com.

Forward-Looking Statements

This press release contains “forward-looking information” within the
meaning of applicable Canadian securities legislation which are based
upon Columbia Care’s current internal expectations, estimates,
projections, assumptions and beliefs and views of future events.
Forward-looking information can be identified by the use of
forward-looking terminology such as “expect”, “likely”, “may”, “will”,
“should”, “intend”, “anticipate”, “potential”, “proposed”, “estimate”
and other similar words, including negative and grammatical variations
thereof, or statements that certain events or conditions “may”, “would”
or “will” happen, or by discussions of strategy. Forward-looking
information include estimates, plans, expectations, opinions, forecasts,
projections, targets, guidance or other statements that are not
statements of fact. Any forward-looking information speaks only as of
the date on which it is made, and, except as required by law, Columbia
Care does not undertake any obligation to update or revise any
forward-looking information, whether as a result of new information,
future events or otherwise. New factors emerge from time to time, and it
is not possible for Columbia Care to predict all such factors. When
considering these forward-looking statements, readers should keep in
mind the risk factors and other cautionary statements in Columbia Care’s
final prospectus dated March 21, 2019 and filed with the applicable
Canadian securities regulatory authorities on SEDAR at www.sedar.com.
The risk factors and other factors noted in Columbia Care’s Annual
Information Form could cause actual events or results to differ
materially from those described in any forward-looking information.

1   See “Non-IFRS Financial Measures”
 
                   
TABLE 1 – CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in US $ thousands, except unit and per unit figures, unaudited)
 
 
First Quarter 2019 Q1 2019 Q1 2018
 
Revenue $ 12,870 $ 8,849
Production costs   (8,469 )   (5,436 )
 
Gross profit before fair value adjustments $ 4,401 $ 3,413
Fair value adjustments biological assets, net   (6,604 )   (2,196 )
 
Gross profit $ (2,203 ) $ 1,217
Operating expenses $ (21,925 ) $ (9,451 )
 
Operating loss $ (24,128 ) $ (8,234 )
Other income (expense), net (389 ) (744 )
Provision for income taxes   (615 )   (719 )
 
Net income (loss) $ (25,132 ) $ (9,697 )
Net loss attributable to non-controlling interests   (272 )   (261 )
 
Net income (loss) attributable to Columbia Care members $ (24,860 ) $ (9,436 )
 
Weighted average common units outstanding – basic 14,613,453 12,254,119
Weighted average common units outstanding – diluted 14,613,453 12,254,119
 
Earnings (loss) per common unit attributable to Columbia Care
members – basic
$ (1.70 ) $ (0.77 )
Earnings (loss) per common unit attributable to Columbia Care
members – diluted
$ (1.70 ) $ (0.77 )
 
 
 
Fourth Quarter and Full Year 2018 Q4 2018 Q4 2017 FY 2018 FY 2017
 
Revenue $ 10,983 $ 8,057 $ 39,328 $ 29,183
Production costs   (7,053 )   (4,161 )   (22,874 )   (15,513 )
 
Gross profit before fair value adjustments $ 3,930 $ 3,896 $ 16,454 $ 13,670
Fair value adjustments biological assets, net   (4,521 )   16,087     673     40,046  
 
Gross profit $ (591 ) $ 19,983 $ 17,127 $ 53,716
Operating expenses $ (18,557 ) $ (10,090 ) $ (50,790 ) $ (37,389 )
 
Operating loss $ (19,148 ) $ 9,893 $ (33,663 ) $ 16,327
Other income (expense), net 419 (2,056 ) (3,166 ) (8,265 )
Provision for income taxes   (1,690 )   (5,016 )   (2,831 )   (5,203 )
 
Net income (loss) $ (20,419 ) $ 2,821 $ (39,660 ) $ 2,859
Net loss attributable to non-controlling interests   (28 )   (116 )   (863 )   (502 )
 
Net income (loss) attributable to Columbia Care members $ (20,391 ) $ 2,937 $ (38,797 ) $ 3,361
 
Weighted average common units outstanding – basic 14,087,999 12,069,792 12,893,741 11,819,891
Weighted average common units outstanding – diluted 14,087,999 12,735,559 12,893,741 12,286,848
 
Earnings (loss) per common unit attributable to Columbia Care
members – basic
$ (1.45 ) $ 0.24 $ (3.01 ) $ 0.28
Earnings (loss) per common unit attributable to Columbia Care
members – diluted
$ (1.45 ) $ 0.23 $ (3.01 ) $ 0.27
 
TABLE 2 – RECONCILIATION OF IFRS TO NON-IFRS MEASURES
(in US $ thousands, unaudited)
                   
 
First Quarter 2019 Q1 2019 Q1 2018
 
Net income (loss) $ (25,132 ) $ (9,697 )
Provision for income taxes 615 719
Depreciation and amortization 2,870 987
Net interest and debt amortization   447     745  
 
EBITDA $ (21,200 ) $ (7,246 )
 
Unit-based compensation 4,232 2,788
Fair value adjustments biological assets, net   6,604     2,196  
 
Adjusted EBITDA $ (10,364 ) $ (2,262 )
 
 
 
Fourth Quarter and Full Year 2018 Q4 2018 Q4 2017 FY 2018 FY 2017
 
Net income (loss) $ (20,419 ) $ 2,821 $ (39,660 ) $ 2,859
Provision for income taxes 1,690 5,016 2,831 5,203
Depreciation and amortization 1,291 1,207 4,677 3,898
Net interest and debt amortization   (88 )   2,054     3,165     8,264  
 
EBITDA $ (17,526 ) $ 11,098 $ (28,987 ) $ 20,224
 
Unit-based compensation 5,540 3,519 14,058 15,164
Fair value adjustments biological assets, net   4,521     (16,087 )   (673 )   (40,046 )
 
Adjusted EBITDA $ (7,465 ) $ (1,470 ) $ (15,602 ) $ (4,658 )
 
TABLE 3 – CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(in US $ thousands, unaudited)
                   
 
First Quarter 2019 Q1 2019 Q1 2018
 
Net cash used in operating activities $ (15,073 ) $ (6,212 )
Net cash used in investment activities (12,399 ) (642 )
Net cash provided by financing activities 40,295 7,585
Net increase in cash 12,823 731
Cash balance – beginning of period 46,241 13,297
Cash balance – end of period 59,064 14,028
 
 
 
Fourth Quarter and Full Year 2018 Q4 2018 Q4 2017 FY 2018 FY 2017
 
Net cash used in operating activities $ (7,759 ) $ (1,696 ) $ (24,766 ) $ (9,467 )
Net cash used in investment activities (20,428 ) (4,731 ) (27,872 ) (23,766 )
Net cash provided by financing activities 51,515 10,346 85,582 44,288
Net increase in cash 23,328 3,919 32,944 11,055
Cash balance – beginning of period 22,913 9,378 13,297 2,242
Cash balance – end of period 46,241 13,297 46,241 13,297
 
TABLE 4 – CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (SELECT
ITEMS)
(in US $ thousands, unaudited)          
 
 
MARCH 31

2019

DECEMBER 29

2018

 
Cash $ 59,064 $ 46,241
Total current assets 131,169 160,122
Property and equipment, net 51,554 39,794
Right of use assets 33,654
Total assets 254,215 233,927
Total current liabilities 24,589 15,309
Total liabilities 70,798 30,238
Total equity 183,417 203,689

Contacts

Investors:
Investor Relations
+1.212.271.0915
[email protected]

Media:
Josephine
Belluardo, Ph.D.
LifeSci Public Relations
+1.646.751.4361
[email protected]

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